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ARTICLE

Banking

in the New Reality

ew challenges and opportunities are as we move through what KPMG describes
quickly reshaping financial services - as the 4 phase framework: from reaction, to
Nfrom AI to fintech, to open platforms building resilience, followed by recovery, and
and data analytics, to greater customer then arrival in a new reality.
centricity and workforce shaping - all of Multiple challenges abound. Difficult economic
which financial institutions need to address times lie ahead, customer defaults could rise
while navigating the evolving risk and and banks’ balance sheets and profitability
regulatory landscape. Organizations are face a squeeze. But for those that reimagine
looking at a future that is more interconnected, their operations, harness an increasingly
more collaborative, and frictionless - one digital economy, and manage their costs and
where trust, growth and delivering value are risks, opportunities for growth could also be
paramount. on offer. As a part of our market analysis at
Disruption - Regulation - Cost - These a global level, KPMG has identified 6 macro
are three key themes that link the many trends that could benefit leadership if they
challenges retail, commercial and investment consider them as a part of their future forward
banks face in today’s rapidly evolving financial strategies.
services industry. From navigating the phasing Macro trends
out of LIBOR and meeting the demands of the 1. New channels reconfiguring the
stress within the marketplace and the sector, landscape
to implementing new technologies such as AI,
robotics and blockchain, and transitioning to As society becomes more cashless and
new, low-cost structures while driving value digitization accelerates, banks will need
creation - banks are under pressure from to evaluate their branch networks and ask
several fronts. themselves fundamental questions about the
COVID-19 has dramatically reshaped the purpose of their physical outlets.
world in which we live, with tumultuous 2. Harnessing the shift to a digital economy
economic and financial effects running A rise in electronic payment mechanisms,
alongside the public health emergency which digital currencies and a generation of
has transitioned into an economic emergency. new technology-based service providers
At the height of the outbreak, banks across coming into the market, banks will need
the globe played a fundamentally important to devise strategies to prevent themselves
role in supporting businesses and families from becoming disintermediated. With the
by administering government - backed competitors’ landscape evolving from banks
loans, providing additional liquidity, delaying and financial institutions towards technology
repayments and rapidly installing forbearance and telecom companies, strategies and
measures. investments will need to be more aligned with
In many ways though, trust in banks is at an the future focused digital economy.
all-time high. Customers and businesses view 3. Reimagining cost, new operating
them in a new and positive light. The key now models emerge
is to retain those gains and build on them Operating expense will become an ever-
30 Bahrain Banks Directory 2022